Registration Statement Contents for Emerging Growth Companies

Floor Speech

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Mrs. WAGNER. Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 2610) to amend the Securities Exchange Act of 1934 to specify certain registration statement contents for emerging growth companies, to permit issuers to file draft registration statements with the Securities and Exchange Commission for confidential review, and for other purposes, as amended.

The Clerk read the title of the bill.

The text of the bill is as follows: H.R. 2610

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. REGISTRATION STATEMENTS.

Section 12(b) of the Securities Exchange Act of 1934 (15 U.S.C. 78l(b)) is amended--

(1) in paragraph (1)(K), by striking ``years,'' and inserting ``years (or, in the case of an emerging growth company, not more than the two preceding years),''; and

(2) by adding at the end the following: ``Any issuer may confidentially submit to the Commission a draft registration statement for confidential nonpublic review by the staff of the Commission prior to public filing, provided that the initial confidential submission and all amendments thereto shall be publicly filed with the Commission not later than 10 days before listing on a national securities exchange. Notwithstanding any other provision of this title, the Commission shall not be compelled to disclose any information provided to or obtained by the Commission pursuant to this subsection. For purposes of section 552 of title 5, this subsection shall be considered a statute described in subsection (b)(3)(B) of such section 552. Information described in or obtained pursuant to this subsection shall be deemed to constitute confidential information for purposes of section 24.''.

Mr. Speaker, I rise in support of H.R. 2610, a bill to harmonize the emerging growth company, EGC, financial statement requirements originally enacted in the JOBS Act of 2012.

I thank my colleague, and our esteemed chair of the Financial Services Committee, Chairman McHenry, for his leadership on this important piece of bipartisan legislation that will attract companies to go public here in the United States.

Title I of the bipartisan JOBS Act of 2012 established a new class of public companies, or issuers, called emerging growth companies, to attract small companies to go public and reverse the steady decline of small initial public offerings, IPOs, in American capital markets.

Under the JOBS Act, EGCs are granted scaled reporting and disclosure requirements for a limited time after they go public. This attractive accommodation allows the company to grow before absorbing the costly regulatory burdens faced by large public companies.

One accommodation EGCs may take advantage of under the JOBS Act is providing 2 years of audited financial statements rather than 3 years when conducting an IPO.

Sometimes an EGC in its entirety does not undertake an IPO and instead spins off a segment of its business as a new company and takes that spin-off public. However, spin-offs of an EGC may not take advantage of the 2-year financial statement accommodation.

The EGC financial statement accommodations should apply equally, whether an EGC is conducting an IPO or spinning off a segment of its business and taking that company public.

Mr. Speaker, H.R. 2610 ensures consistency and equal application by clarifying that an EGC may present 2 years rather than 3 years of audited financial statements in both IPOs and spinoff transactions.

Mr. Speaker, for this reason, I urge my colleagues to support H.R.
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Mrs. WAGNER. Mr. Speaker, I simply urge my colleagues to support H.R. 2610, and I yield back the balance of my time.

Ms. JACKSON LEE. Mr. Speaker, I rise today in support of H.R. 2610, which amends the Securities Exchange Act of 1934.

This amendment specifies certain registration statement contents for emerging growth companies.

Additionally, the amendment permits issuers to file draft registration statements with the Securities and Exchange Commission for confidential review prior to a public filing.

Further, emerging growth companies will only be required to submit profit and loss statements from the previous two years in registration statements submitted to the SEC, rather than the previous three years currently required by law.

This bill facilitates greater efficiency and capital formation without sacrificing investor protection.

In my home state of Texas, the Houston area leads the Nation in small business development and is one of the top emerging ecosystems for startups globally.

More broadly, Texas remains the top destination in the Nation for new companies.

Under this bill, emerging companies across Texas, the City of Houston, and the Nation will better be able to explore their options for future growth, evaluate required disclosures, and thoughtfully consider whether they will proceed with their public offering.

This bill will boost these businesses and enhance their ability to catalyze economic growth and job creation nationwide.

I urge my colleagues to join me in supporting H.R. 2610 and the economic growth of our Nation, which is fueled by these emerging growth companies.

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